Knowledge Base/What is a Moving Average Convergence/Divergence (MACD)?

What is a Moving Average Convergence/Divergence (MACD)?

Moving Average Convergence/Divergence (MACD) is a momentum indicator that is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA.

Traders use MACD to determine whether market trends are accelerating by evaluating whether the value is above or below the signal line. The signal line is the difference between the two EMAs. MACD is often shown with a histogram that graphs the distance between the MACD and its signal line. The histogram value indicates how far the MACD is away from the signal line, and the direction in which momentum is moving.

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